David Adamson
Executive Vice President, Equity Markets
Computershare recently brought together a group of experts in markets, economics, and business to discuss how US and global economic trends are impacting businesses in today’s environment. In general, the outlook was positive and two key topics emerged: globalization versus deglobalization and the global workforce.
General Outlook
Based on traditional metrics, the US is looking forward with optimism: 250,000 jobs were added in September 2024 with fewer companies laying off employees, inflation is down to roughly 2%, steps are being taken to lower interest rates, and economic and GDP growth are strong, around 3%.
Another positive sign is that well over 100 US companies are expected to move forward with an initial public offering (IPO) in the next year. This follows several slow years, which started during the pandemic. IPOs need perfect conditions and during recent turbulent times, there have been more private equity backed IPOs than IPOs with traditional venture capital backing. An increase in IPOs is a strong positive indicator for the economy.
Globalization versus Deglobalization
The market has been “deglobalizing” since 2018 due to trade regulations and this was accelerated by the pandemic. However, the US is dependent upon goods from other nations. If the deglobalization trend continues, we could see new policy or legislation to support onshoring or friendshoring things like manufacturing, or near-shoring to closer allies such as Mexico, as well as expanded agreements with Canada to protect supply chains.
Despite the recent trend, there are multinational companies and economies the US relies on. Consider the semi-conductor industry which is global – the materials required are found in China so it would not be possible to move manufacturing entirely to the US. Another barrier to deglobalization is the high value of the US dollar, which makes it difficult to onshore certain types of work, such as manufacturing, because it costs more to do so than leveraging workers in lower cost countries.
Even more, if greater trust is built between the east and the west – for example, the US and China – the deglobalization trend could reverse itself and globalization could accelerate. It is a dynamic that bears watching as we move forward.
Global workforce challenges
Looking further ahead, for example 30 to 50 years from now, it is possible that one of the biggest challenges for larger economy countries is going to be the workforce.
It is speculated that East Asian and European populations are simply not growing fast enough to sustain their economies. The number and percentage of people in the active workforce will decline. In contrast, India has the world’s largest population and is an emerging player in the global economy but could face demographic issues down the road.
As for the US, despite lower birth rates than in the past, some feel the US economy is bolstered by high immigration which helps maintain a strong and diverse workforce; changes in policy or work performed onshore could have an unpredictable impact.
If the trend of decreasing workforces continues, lower income countries with higher fertility rates could potentially emerge, while traditionally strong economic powers lag. This changing dynamic in global workforce could alter balance of trade between countries and how work is outsourced across the globe.
Finally, the impact of new technology and automation on human jobs is a new and disruptive factor to be considered.
Overall, the current global economic market is as complex and difficult to predict as ever: traditional metrics and government data may no longer be enough to provide analysts with insights into shifting dynamics; the factors that influence growth are changing; and shifting geopolitical alliances can cause unpredictable disruption. To be successful, companies will need to continuously adapt to changing markets.
If you have questions, please reach out to me at david.adamson@computershare.com.
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